A virtual organization is a temporary or permanent collection of geographically dispersed individuals, groups, organizational units, or entire organizations that depend on electronic linking in order to complete the production process (working definition). Virtual organizations do not represent a firm’s attribute but can be considered as a different organizational form and carries out the objectives of

cyber diplomacy Cyber-diplomacy is the evolution of public diplomacy to include and use the new platforms of communication in the 21st century. As explained by Jan Melissen in ''The New Public Diplomacy: Soft Power in International Relations'', cyber-diplomacy � ...

. Unfortunately, it is quite hard to find a precise and fixed definition of fundamental notions such as virtual organization or virtual company. The term virtual organization ensued from the phrase "virtual reality", whose purpose is to look like reality by using electronic sounds and images. The term virtual organization implies the novel and innovative relationships between organizations and individuals. Technology and

globalization Globalization, or globalisation (Commonwealth English; see spelling differences), is the process of interaction and integration among people, companies, and governments worldwide. The term ''globalization'' first appeared in the early 20t ...

both support this particular type of organization.
Greenberg, D. and Heneman, R., 2002. Human Resource Management in Virtual Organizations. USA: Information Age Publishing Virtual can be defined as "not physically existing as such but made by

software Software is a set of computer programs and associated documentation and data. This is in contrast to hardware, from which the system is built and which actually performs the work. At the lowest programming level, executable code consists ...

to appear to do so", in other words "unreal but looking real". This definition precisely outlines the leading principle of this unconventional organization, which holds the form of a real (conventional) corporation from the outside but does not actually exist physically and implicates an entirely digital process relying on independents web associates.
Burn, J., Barnett, M., Marshall, P., 2002. e-Business strategies for Virtual Organizations. Oxford: Taylor & Francis Ltd Thus, virtual organizations are centred on technology and position physical presence in the background. Virtual organizations possess limited physical resources as value is added through (mobile) knowledge rather than (immovable) equipment.The Economist, 2009. The virtual organisation. nlineAccessible at: ccessed 13 October 2014/ref> Virtual organizations necessitate associations, federations, relations, agreements and alliance relationships as they essentially are partnership webs of disseminated organizational entities or self-governing corporations.

Apparition and evolution

1980s

The emergence of

outsourcing Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and sometimes involves transferring employees and ...

in the 80s unquestionably played a significant role as its aim is to eradicate unproductive internal services and transfers the difficulty outside of the organization.
Afsarmanesh, H., Camarinha-Matos, L. and Ollus, M., 2005. Virtual Organizations: Systems and Practises. Boston: Springer Science + Business Media. Outsourcing necessarily implies partnerships as companies resort to other establishments. Thus, this method highlighted the necessity of alliances and Business networking, networking in a business and provoked a great interest for new disciplines. Indeed, this process has dramatically changed the way organizations consider partners and has raised their awareness concerning the benefits smart alliances can offer. Though, until the early 1980s, this extremely bureaucratic organization arrangement (involving challenging, complex and slower decision-making) was considered adequate to manage a vast number of employees.
Thomas, G., n.d. Virtual Organizations nlineAccessible at: ccessed 14 October/ref>

1990s

The terms virtual organization,

virtual enterprise A virtual enterprise (VE) is a temporary alliance of businesses that come together to share skills or core competencies and resources in order to better respond to business opportunities, and whose cooperation is supported by computer networks. ...

or virtual corporation were first utilized in the early 1990s as demonstrate the work of Jan Hopland, Roger N. Nagel, William H. Davidow and Malone. The table below allows us to understand more specifically their faintly distinctive theories:

Today

As mentioned before, there is not yet a universal definition of the term virtual organization. Even though this concept started to evolve a long time ago it is still progressing nowadays. We can observe below the innovative virtual organization's model focusing on quickly and efficiently creating first-class products (using each partner core competence).

Technology required

Virtual organizations are supported by primary technologies such as the

Internet The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, pub ...

and the

World Wide Web The World Wide Web (WWW), commonly known as the Web, is an information system enabling documents and other web resources to be accessed over the Internet. Documents and downloadable media are made available to the network through web se ...

, EDI,

telecommunications Telecommunication is the transmission of information by various types of technologies over wire, radio, optical, or other electromagnetic systems. It has its origin in the desire of humans for communication over a distance greater than that fe ...

e-mails Electronic mail (email or e-mail) is a method of exchanging messages ("mail") between people using electronic devices. Email was thus conceived as the electronic (digital) version of, or counterpart to, mail, at a time when "mail" meant ...

, groupware, and

video conferencing Videotelephony, also known as videoconferencing and video teleconferencing, is the two-way or multipoint reception and transmission of audio signal, audio and video signals by people in different locations for Real-time, real time communication. ...

.
Isaca, 2001. Understanding Virtual Organizations. nlineAvailable at: ccessed 10 October 2014/ref>

Knowledge management technologies

Knowledge management Knowledge management (KM) is the collection of methods relating to creating, sharing, using and managing the knowledge and information of an organization. It refers to a multidisciplinary approach to achieve organisational objectives by making ...

technologies assisting virtual organizations comprise: * Collaborative technologies *

Extensible markup language Extensible Markup Language (XML) is a markup language and file format for storing, transmitting, and reconstructing arbitrary data. It defines a set of rules for encoding documents in a format that is both human-readable and machine-readable. T ...

(XML) * Intranets and

extranets An extranet is a controlled private network that allows access to partners, vendors and suppliers or an authorized set of customers – normally to a subset of the information accessible from an organization's intranet. An extranet is similar to ...

* Personal devices *

Wireless technologies Wireless communication (or just wireless, when the context allows) is the transfer of information between two or more points without the use of an electrical conductor, optical fiber or other continuous guided medium for the transfer. The most ...

Virtual reality Virtual reality (VR) is a simulated experience that employs pose tracking and 3D near-eye displays to give the user an immersive feel of a virtual world. Applications of virtual reality include entertainment (particularly video games), educ ...

(VR) *

Portal Portal often refers to: * Portal (architecture), an opening in a wall of a building, gate or fortification, or the extremities (ends) of a tunnel Portal may also refer to: Arts and entertainment Gaming * ''Portal'' (series), two video games ...

EDI

EDI can constitute a useful tool for virtual organizations as it transfers

information Information is an abstract concept that refers to that which has the power to inform. At the most fundamental level information pertains to the interpretation of that which may be sensed. Any natural process that is not completely random ...

(in the adequate form which a computer can utilize straightforwardly) from a computer to another and does not necessitate the intervention of any individual. EDI could be a benefit to virtual organizations in numerous ways as the exchange of information between associates is facilitated and more efficient than with non-electronic transfer: better

inventory management Field inventory management commonly known as inventory management is the function of understanding the stock mix of a company and the different demands on that stock. The demands are influenced by both external and internal factors and are balan ...

and

shipping Freight transport, also referred as ''Freight Forwarding'', is the physical process of transporting Commodity, commodities and merchandise goods and cargo. The term shipping originally referred to transport by sea but in American English, it h ...

performance, amount of time saved and faults escaped by the fact that data requisite to be entered only once, as well as a rise of the speed and accuracy of processes. However, using EDI is not the optimal choice to make for assisting communication within a virtual organization, as the flexibility required for quick reactions is lacking in this system.
Lin, F., Shaw, M. and Strader, T., 1998. Information infrastructure for electronic virtual organization management. nlineAccessible at: ccessed 11 October 2014/ref>

Groupware

Virtual organizations can be supported by groupware systems as it delivers a shared core of

to partners and a

platform Platform may refer to: Technology * Computing platform, a framework on which applications may be run * Platform game, a genre of video games * Car platform, a set of components shared by several vehicle models * Weapons platform, a system or ...

to collaborate regardless of the associates’ physical position. This way, groupware systems can assist associates track the rate of progress in work being done in a way that they can cooperate on the project without being concerned about geographical barriers. However, in a similar way as EDI, groupware is not the ideal decision to make for assisting communication within a virtual organization as it would not empower the organization to rapidly form an alliance to respond to a

market opportunity A market analysis studies the attractiveness and the dynamics of a special market within a special industry. It is part of the industry analysis and thus in turn of the global environmental analysis. Through all of these analyses the strengths, wea ...

, even though it offers more flexibility than EDI.

World Wide Web (WWW)

Many virtual firms have chosen the internet-based

WWW The World Wide Web (WWW), commonly known as the Web, is an information system enabling documents and other web resources to be accessed over the Internet. Documents and downloadable media are made available to the network through web se ...

in order to support organizational communication, as it constitutes a practical alternative to the EDI and groupware’s inflexibility. Even though helping virtual organizations’ associates to communicate was not the initial purpose of the

, it is still favourably relevant to this category of organizations. The web permits all co-workers (even the isolated ones) to share their thoughts, opinions and every part of any mutual mission as it was shaped to be a sort of

data In the pursuit of knowledge, data (; ) is a collection of discrete values that convey information, describing quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpreted ...

gathering of individuals’

knowledge Knowledge can be defined as awareness of facts or as practical skills, and may also refer to familiarity with objects or situations. Knowledge of facts, also called propositional knowledge, is often defined as true belief that is distinc ...

Benefits

To the organization

Competitive advantage In business, a competitive advantage is an attribute that allows an organization to outperform its competitors. A competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skilled ...

Igbaria, M. and Tan, M., 1998. The Virtual Workplace. USA: Idea Group Publishing * As a way of to conduct supply chain integration or bridge the

merger and acquisition Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspec ...

processes between two companies. nline * A pool of

abilities Abilities are powers an agent has to perform various actions. They include common abilities, like walking, and rare abilities, like performing a double backflip. Abilities are intelligent powers: they are guided by the person's intention and exec ...

and

Flexibility Stiffness is the extent to which an object resists deformation in response to an applied force. The complementary concept is flexibility or pliability: the more flexible an object is, the less stiff it is. Calculations The stiffness, k, of a bo ...

, dynamism and better

responsiveness Responsiveness as a concept of computer science refers to the specific ability of a system or functional unit to complete assigned tasks within a given time. For example, it would refer to the ability of an artificial intelligence system to unde ...

: virtual organizations, also called "boundaryless organization", do not imply time or geographical obstacles * Less

investments Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is ...

costs initially *

Productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...

: the

implementation Implementation is the realization of an application, or execution of a plan, idea, model, design, specification, standard, algorithm, or policy. Industry-specific definitions Computer science In computer science, an implementation is a real ...

of virtual organization implies a 30 to 50% rise of

productivity Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...

* Less

costs In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which ...

, more profits: virtual organization are saving a huge amount of money as they are no

real-estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...

investments necessary, the

labor cost Direct labor cost is a part of wage-bill or payroll that can be specifically and consistently assigned to or associated with the manufacture of a product, a particular work order, or provision of a service. Also, we can say it is the cost of the wor ...

is inferior and the number of errors is poorer

To the employees

* More independence: individuals can work when they need to and decide in which ways * Amount of stress reduced: no workplace pressure and consequently an improved personal and family life * Less money spent: diminution of gas consumption or money spent on public transports

To the society

* An

environment Environment most often refers to: __NOTOC__ * Natural environment, all living and non-living things occurring naturally * Biophysical environment, the physical and biological factors along with their chemical interactions that affect an organism or ...

al benefit: less

pollution Pollution is the introduction of contaminants into the natural environment that cause adverse change. Pollution can take the form of any substance (solid, liquid, or gas) or energy (such as radioactivity, heat, sound, or light). Pollutants, the ...

* Expansion of the

workplace A workplace is a location where someone works, for their employer or themselves, a place of employment. Such a place can range from a home office to a large office building or factory. For industrialized societies, the workplace is one of th ...

area: possibility to work efficiently in the

rural areas In general, a rural area or a countryside is a geographic area that is located outside towns and cities. Typical rural areas have a low population density and small settlements. Agricultural areas and areas with forestry typically are describ ...

Issues and challenges encountered

Despite the advantages provided, it can be quite challenging to those familiar to conventional work group to lead as a virtual organization. Thus, large risks are conveyed with the challenge of working virtually as this new organizational structure implies several issues.Lee, M., 2014. Leading Virtual Project Teams: Adapting Leadership Theories and Communications Techniques to 21st Century Organizations. New York: CRC Press Taylor & Francis group Some people wrongly think that the challenges only come from the

technology management Technology management is a set of management disciplines that allows organizations to manage their technological fundamentals to create customer advantage. Typical concepts used in technology management are: * Technology strategy (a logic or rol ...

but we should not forget the importance of humans. Clearly

information technology Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of data . and information. IT forms part of information and communications technology (ICT). An information technology system (I ...

offers an efficient and largely beneficial

but we should not neglect the necessity, especially in a virtual organization, of the individuals’ skills and manner to collaborate.

Communication

Communication Communication (from la, communicare, meaning "to share" or "to be in relation with") is usually defined as the transmission of information. The term may also refer to the message communicated through such transmissions or the field of inquir ...

is a crucial factor in a virtual organization as it is responsible of its efficiency and even to its survival. Virtual organizations imply various autonomous and international workers, which also involve challenges such as different

time zones Time is the continued sequence of existence and event (philosophy), events that occurs in an apparently irreversible process, irreversible succession from the past, through the present, into the future. It is a component quantity of various me ...

and

language barriers Language is a structured system of communication. The structure of a language is its grammar and the free components are its vocabulary. Languages are the primary means by which humans communicate, and may be conveyed through a variety of met ...

. The collaboration between associates might also get quite complicated as this type of organization denotes only a slight amount of

face-to-face interaction Face-to-face interaction is social communication carried out without any mediating technology. It is defined as the mutual influence of individuals’ direct physical presence with their body language and verbal language. It is one of the basic ...

. Thus, a lack of multiple

communication Communication (from la, communicare, meaning "to share" or "to be in relation with") is usually defined as the transmission of information. The term may also refer to the message communicated through such transmissions or the field of inquir ...

approaches can be observed in virtual organizations.

Cultural

Culture Culture () is an umbrella term which encompasses the social behavior, institutions, and norms found in human societies, as well as the knowledge, beliefs, arts, laws, customs, capabilities, and habits of the individuals in these groups.Tyl ...

constitutes an essential element in any organization of any type. Yet, virtual organizations have to be even more vigilant about this notion as they imply a shared

leadership Leadership, both as a research area and as a practical skill, encompasses the ability of an individual, group or organization to "lead", influence or guide other individuals, teams, or entire organizations. The word "leadership" often gets view ...

between the team, which is composed of self-reliant workers from all around the world. Virtual organizations must find a way to overcome

cultural differences Cultural diversity is the quality of diverse or different cultures, as opposed to monoculture, the global monoculture, or a homogenization of cultures, akin to cultural evolution. The term "cultural diversity" can also refer to having different cu ...

, which involve dissimilar approaches of working (such as time and deadlines) and living (punctuality for instance), in other words, distinctive philosophies. Thus, virtual organization must exegete respect for differences among the team.

Interpersonal

Managing virtually successfully requires a valuable communication and cooperation among the team. Perceptions between partners might be quite dissimilar and could lead to conflicts concerning the management of the virtual organization. Thus, it is more than necessary that associates build a solid relationship despite the distance obstacle Trust is also a crucial matter as a shared leadership among co-workers consequently implies the loss of control on certain functions entrusted to other associates.

Technological

Virtual organizations are completely dependent to

technology Technology is the application of knowledge to reach practical goals in a specifiable and reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in medicine, science, ...

as they are entirely internet-based. It is more than necessary for the individuals involved in a partnership to possess similar technological tools from its associates. Compatibility matters resulting from the hardware and

such as the

operating system An operating system (OS) is system software that manages computer hardware, software resources, and provides common services for computer programs. Time-sharing operating systems schedule tasks for efficient use of the system and may also in ...

as well as certain computer’s software might disturb the efficiency of the virtual organization. For instance, the occurrence of incompatibility issues (difficulty in integrating information generated with dissimilar tools) concerning the hardware or software, would dramatically affect virtual organizations’ process and performance as they depend on these tools. Institute, uphold and spread a definite common knowledge between partners is one of the ultimate issue to virtual organizations’ management.

Security Security is protection from, or resilience against, potential harm (or other unwanted coercive change) caused by others, by restraining the freedom of others to act. Beneficiaries (technically referents) of security may be of persons and social ...

and

data protection Information privacy is the relationship between the collection and dissemination of data, technology, the public expectation of privacy, contextual information norms, and the legal and political issues surrounding them. It is also known as data pr ...

also constitute a significant challenge as all the information regarding virtual organizations are transmitted and gathered digitally. A continuous control and evaluation of the technology utilized should be done by virtual organizations in order to prevent being outdated and losing opportunities.

Economical

Virtual organization involves considerable costs. Between the setup and equipment costs and the maintenance costs, the bill can become quite steep quickly. It also constitutes a challenge to measure, evaluate and track the work done within the different departments of the virtual infrastructure. This might lead to partners missing deadlines, the necessity to rework and, thus, a loss of efficiency and profit.

Examples of virtual organizations

Private sector

* Hollywood * British Telecom * Reuters Holdings * Aventis
Center for Culture & Global Studies

Public sector

* United States Department of Agriculture (USDA) National Plant Data Center * United States Department of Energy (The Office of Science Integrated Support Center) * Emics and OphSmart
Camarinha-Matos, L., 2008. Pervasive Collaborative Networks. Boston, MA: International Federation for Information Processing

References

{{Reflist Business models Types of organization